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  Basic Economic Law of Monopoly Capitalism - Transition to Imperialism

Ostrovityanov K.V. Shepilov D.T. Leontiev L.A. , Laptev I.D. Kuzminov I.I. Gatovsky L.M

State publishing house of political literature. Moscow. 1954

Economic doctrines of the era of capitalism

With the development of capitalism and the growth of its contradictions, various directions of economic thought took shape and developed, expressing the interests of certain classes.

Bourgeois classical political economy.

In the struggle against feudalism, for the establishment of the capitalist order, the bourgeoisie created its own political economy, which debunked the economic views of the ideologists of feudalism and for a certain time played a progressive role.

The capitalist mode of production established itself primarily in England. Bourgeois classical political economy was also born here. William Petty (1623 ‐ 1687), whose activity dates back to the period of the decay of mercantilism, in an effort to discover the inner connection of the economic phenomena of bourgeois society, made the important discovery that goods are exchanged in accordance with the amount of labor required for their production.

The Physiocrats played an important role in the creation of bourgeois political economy . Francois Quesnay (1694 ‐ 1774) was at the head of this direction . The Physiocrats came out in France in the second half of the 18th century, during the period of ideological preparation for the bourgeois revolution. Like the representatives of the French educational philosophy of that time, the physiocrats believed that there were natural laws of human society given by nature. France was at that time an agricultural country. In contrast to the mercantilists, who saw wealth only in money, the Physiocrats declared nature to be the only source of wealth and, therefore, agriculture, which provides man with the fruits of nature. Hence the name of the school ‐ ʺPhysiocratsʺ, made up of two Greek words meaning:
nature and power.

The doctrine of the ʺpure productʺ occupied a central place in the theory of the Physiocrats. So the physiocrats called the entire surplus of the product in excess of the costs invested in production ‐ that part of the product in which surplus value is embodied under capitalism. The Physiocrats understood wealth as a definite mass of products in their material, natural form, as a definite mass of use values. They argued that the ʺpure productʺ arises exclusively in agriculture and animal husbandry, that is, in those industries where the natural processes of growth of plants and animals occur, while in all other industries the form of products delivered by agriculture only changes.

The most significant work of the physiocratic school was Quesnay ʹs ʺeconomic tableʺ . The merit of Quesnay was that he made a remarkable attempt to present the process of capitalist reproduction as a whole, although he failed to give a scientific theory of reproduction.

Based on the fact that the “pure product” is created only in agriculture, the Physiocrats demanded that all taxes be imposed on landowners, and industrialists should be exempted from tax burdens. This demand made clear the class nature of the physiocrats as the ideologists of the bourgeoisie. The Physiocrats were supporters of the unlimited domination of private property. Arguing that only free competition corresponds to the natural laws of the economy and human nature, they opposed the policy of protectionism to the policy of free trade, fought resolutely against shop restrictions and against state interference in the economic life of the country.

Bourgeois classical political economy reached its highest development in the works of A. Smith and D. Ricardo.

Adam Smith (1723‐1790) made a significant step forward in the scientific analysis of the capitalist mode of production compared to the Physiocrats. His principal work is An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The wealth of a country lies, according to Smith, in the whole mass of goods produced in it. He rejected the one‐sided and therefore incorrect notion of the Physiocrats that the ʺpure productʺ is created only by agricultural labor, and for the first time proclaimed any labor as a source of value, in whatever branch of production it was spent. Smith was an economist of the manufacturing period of the development of capitalism, so he saw the basis for increasing labor productivity in the division of labor.

Smith was characterized by the interweaving of two different approaches to economic phenomena. On the one hand, Smith explores the inner connection of phenomena, trying to penetrate his analysis into the hidden structure or, in Marxʹs words, into the physiology of the bourgeois economic system. On the other hand, Smith gives a description of phenomena as they appear on the surface of capitalist society and, therefore, as they appear to the practical capitalist. The first of these ways of understanding is scientific, the second is non‐scientific. Exploring the internal connection of the phenomena of capitalism, Smith determined the value of a commodity by the amount of labor expended on its production; at the same time, he considered the wages of the wage worker as part of the product of his labor, determined by the value of the means of subsistence, and profit and rent as a deduction from the product created by the labor of the worker. However, Smith did not consistently pursue this view. Smith constantly confused the determination of the value of commodities by the labor contained in them with the determination of the value of commodities by the ʺvalue of labour.ʺ He argued that the determination of value by labor only referred to the ʺprimitive state of societyʺ, by which he meant the simple commodity economy of small producers. Under capitalism, however, the value of a commodity is from income: wages, profits, and rents. Such a statement reflected the deceptive appearance of the phenomena of the capitalist economy. Smith believed that the value of the entire social product consists only of income ‐ wages, profits, and rent, that is, he erroneously omitted the value of the constant capital consumed in the production of goods. This ʺSmithʹs dogmaʺ ruled out any possibility of understanding the process of social reproduction.

Smith first outlined the class structure of capitalist society, pointing out that it falls into three classes: 1) workers, 2) capitalists, and 3) landowners. But Smith was limited by the bourgeois outlook and reflected in his views the underdevelopment of the class struggle of that era; he argued that a community of interests dominates in capitalist society, since everyone strives for their own benefit, and a common benefit arises from the collision of individual aspirations. Strongly opposed to the theoretical views and policies of the mercantilists, Smith ardently defended free competition.

In the writings of David Ricardo (1772‐1823), bourgeois classical political economy was completed. Ricardo lived during the Industrial Revolution in England. His main work, The Principles of Political Economy and Taxation, was published in 1817.

Ricardo developed the labor theory of value with the greatest consistency possible within the bourgeois horizon. Rejecting Smithʹs position that value is determined by labor only in the ʺprimitive state of societyʺ, he showed that the value created by the labor of the worker is the source from which both wages and profit and rent arise.

Proceeding from the fact that value is determined by labor, Ricardo showed the opposition of the class interests of bourgeois society, as it manifests itself in the sphere of distribution. Ricardo considered the existence of classes an eternal phenomenon in the life of society. According to Marx, Ricardo ʺconsciously takes as the starting point of his research the opposition of class interests, wages and profits, profits and ground rent, naively considering this opposition as a natural law of social lifeʺ [1]. Ricardo formulated an important economic law: the higher the wages of the worker, the lower the profit of the capitalist, and vice versa. Ricardo also showed the opposite of profit and rent; but he was mistaken in recognizing the existence of only differential rent, which he associated with the imaginary ʺlaw of diminishing soil fertility.ʺ Ricardo played a large role in the development of political economy. His teaching that value is determined only by labor was of outstanding historical significance. Observing the growth of capitalist contradictions, some of his followers began to conclude: if value is created only by labor, then it is necessary and fair that the worker, the creator of all wealth, should also be the owner of all wealth, all products of labor. Such a demand was put forward in England in the first half of the 19th century by the early socialists, the followers of Ricardo.

At the same time, the teachings of Ricardo bore the features of bourgeois narrow‐mindedness. The capitalist system, with its antithesis of class interests, seemed to Ricardo, as to Smith, a natural and eternal system. Ricardo did not even raise the question of the historical origin of such economic categories as goods, money, capital, profit, etc. He understood capital ahistorical way, identifying it with the means of production.

The emergence of vulgar political economy.

With the development of capitalism and the intensification of the class struggle, classical bourgeois political economy gives way to vulgar political economy. Marx called it vulgar because its representatives replaced the scientific knowledge of economic phenomena with a description of their outward appearance, aiming to embellish capitalism and gloss over its contradictions. The vulgar economists rejected everything that was scientific and took up everything that was unscientific in the views of previous economists (especially A. Smith), everything that was due to the class limitations of their horizons.

“From now on, it was no longer a matter of whether this or that theorem was right or wrong, but of whether it was useful for capital or harmful, convenient, or inconvenient, consistent with police considerations or not. Disinterested research gives way to the battles of hired hacks, impartial scientific research is replaced by biased, obsequious apologetics .

In the field of the theory of value, vulgar economics, in opposition to the determination of value by labor time, put forward a number of propositions that were already refuted by the bourgeois classical school. These include: the theory of supply and demand, which ignores the value underlying prices and replaces the explanation of the very basis of the prices of goods with a description of the fluctuations of these prices; the theory of production costs, which explains the prices of some goods with the help of the prices of other goods, that is, in fact, rotates in a vicious circle; a theory of utility which, in attempting to explain the value of commodities by their usevalue, ignores the fact that the use‐values of heterogeneous commodities are qualitatively different and therefore quantitatively incomparable.

The English vulgar economist T. ‐ R. Malthus (1766 ‐ 1834) came up with the fabrication that the poverty of the broad masses of working people, characteristic of capitalism, is due to the fact that people multiply faster than the amount of means of subsistence delivered by nature can increase. According to Malthus, the necessary correspondence between the size of the population and the amount of livelihood delivered by nature is established by hunger, poverty, epidemics, and wars. The misanthropic ʺtheoryʺ of Malthus was created to justify a social order in which the parasitism and luxury of the exploiting classes coexist with backbreaking labor and the growing need of the broad masses of working people.

French vulgar economist J‐B. Say (1767 ‐ 1832) declared the source of value to be ʺthree factors of productionʺ ‐ labor, capital, and land, concluding from this that the owners of each of the three factors of production receive income ʺowingʺ to them: the worker ‐ wages, the capitalist ‐ profit (or interest ), landowner ‐ rent. Saying that under capitalism there is no contradiction between production and consumption, Say denied the possibility of general crises of overproduction. Sayʹs theory was a gross distortion of reality to please the exploiting classes. The fabrications about the harmony of class interests under capitalism were diligently disseminated by the French economist F. Bastiat (1801 ‐ 1850) and the American C. Carey
(1793 ‐ 1879). Under the pretext of defending bourgeois ʺfreedom of labour,ʺ vulgar political economy waged a fierce struggle against trade unions, collective agreements, and workersʹ strikes. From the second quarter of the 19th century, vulgar political economy gained undivided dominance in bourgeois science.

Petty‐bourgeois political economy.

At the beginning of the 19th century, a petty‐bourgeois trend in political economy emerged, reflecting the contradictory position of the petty bourgeoisie as an intermediate class in capitalist society. Petty‐bourgeois political economy originates from the Swiss economist S. Sismondi (1773 ‐ 1842). Unlike Smith and Ricardo, who considered the capitalist system to be the natural state of society, Sismondi criticized capitalism, condemning it from the positions of the petty bourgeoisie. Sismondi idealized the petty commodity production of peasants and artisans and came up with utopian projects to perpetuate small property, not seeing the inevitability of the growth of capitalist relations inherent in petty commodity production. From the fact that the incomes of workers and small producers are declining, Sismondi erroneously concluded that the market would inevitably shrink as capitalism developed. He incorrectly argued that the accumulation of capital is possible only in the presence of small producers and an external market.

The views of petty‐bourgeois political economy were developed in France by P.‐J‐Proudhon (1809‐1865). He defended the reactionary idea of curing all the social evils of capitalism by setting up a special bank that would carry out a non‐monetary exchange of the products of small producers and would provide free credit to the workers. Proudhon sowed reformist illusions among the working masses, diverting them from the class struggle.

In Russia at the end of the 19th century, the reactionary‐utopian ideas of petty‐bourgeois political economy were preached by liberal populists.

Utopian socialists.

With the advent and development of large‐scale machine industry at the end of the 18th and beginning of the 19th century, the contradictions of capitalism and the disasters that it brings to the working masses became more and more clearly revealed. But the working class was not yet aware of its historical role as the grave‐digger of capitalism. During this period, the great utopian socialists acted: Henri Saint‐Simon (1760 ‐ 1825) and Charles Fourier (1772 ‐ 1837) in France, Robert Owen (1771 ‐ 1858) in England, who played a major role in the history of the development of socialist ideas.

In explaining economic phenomena, the utopian socialists remained on the same soil of the eighteenth‐century enlightenment philosophy on which the representatives of bourgeois classical political economy stood. But while the latter considered the capitalist system to be in accordance with human nature, the utopian socialists viewed this system as contrary to human nature.

The historical significance of the utopian socialists lay in the fact that they subjected bourgeois society to resolute criticism, mercilessly scourging its ulcers such as poverty and deprivation of the masses, doomed to hard, exhausting work, venality, and decay of the rich elite of society, a huge waste of productive forces as a result of competition, crises, etc. To the capitalist system based on private ownership of the means of production and the exploitation of some classes of society by others, the utopian socialists opposed the coming socialist system based on public ownership of the means of production and free from the exploitation of man by man. But the utopian socialists were far from understanding the real ways of realizing socialism.

Not knowing the laws of social development, the laws of the class struggle, they believed that the propertied classes themselves would realize socialism when they could be convinced of the rationality, justice, and expediency of this new system. The understanding of the historical role of the proletariat was completely alien to the utopian socialists. Utopian socialism ʺcould neither explain the essence of wage slavery under capitalism, nor discover the laws of its development, nor find that a social force capable of becoming the creator of a new society” [3] .

Revolutionary democrats in Russia.

In the middle of the 19th century in Russia, which was experiencing a crisis of serfdom, a brilliant galaxy of thinkers emerged who made a great contribution to the development of economic science.

AI Herzen (1812 ‐ 1870) castigated tsarism and serfdom in Russia, calling on the people for a revolutionary struggle against them. He sharply criticized the system of capitalist exploitation that had taken root in the West. Herzen laid the foundation for utopian ʺpeasant socialismʺ. He saw ʺsocialismʺ in the liberation of the peasants with land, in communal land ownership and in the peasant idea of ʺthe right to land.ʺ There was nothing really socialist in these views of Herzen, but they expressed the revolutionary aspirations of the Russian peasantry, who fought to overthrow the power of the landowners and to abolish landownership.

The great Russian revolutionary and scientist N.G. Chernyshevsky ( 1828‐1889 ) has made enormous contributions to the development of economics. Chernyshevsky led the decisive struggle of the revolutionary democrats against serfdom and the tsarist autocracy in Russia. He gave a brilliant critique not only of serfdom, but also of the capitalist system, which by that time had become established in Western Europe and North America. Chernyshevsky deeply revealed the class character and limitations of bourgeois classical political economy and subjected to devastating criticism the vulgar economists ‐ John Stuart Mill, Say, Malthus and others. According to Marx, N. G. Chernyshevsky skillfully explained the bankruptcy of bourgeois political economy.

Bourgeois political economy, which serves the selfish interests of the capitalists, Chernyshevsky opposed the ʺpolitical economy of the working peopleʺ, in which labor and the interests of the working people should take a central place. Being a representative of utopian ʺpeasant socialismʺ, Chernyshevsky, in view of the underdevelopment of capitalist relations in contemporary Russia, did not see that the development of capitalism and the proletariat creates material conditions and social strength for the implementation of socialism. But Chernyshevsky, in understanding the nature of capitalist society and its class structure, the nature of its economic development, went far ahead in comparison with the Western European utopian socialists and took a major step towards scientific socialism. Unlike the utopian socialists of the West, Chernyshevsky attached decisive importance to the revolutionary activity of the working masses, their struggle for their liberation, and called for a peopleʹs revolution against the exploiters. Chernyshevsky was a consistent, militant revolutionary democrat. Lenin wrote that his writings emanate the spirit of the class struggle.

The economic doctrine of Chernyshevsky represents the pinnacle of the development of all political economy before Marx. In his philosophical views Chernyshevsky was a militant materialist. Like Herzen, he came close to dialectical materialism.

The revolutionary democrats ‐ Herzen, Chernyshevsky and their like‐minded people were the forerunners of the Russian
Social Democracy.

Revolutionary upheaval in political economy accomplished by K. Marx and F. Engels.

By the middle of the 19th century, the capitalist economic system had become dominant in the principal countries of Western Europe and in the United States of America. A proletariat took shape and began to rise up to fight against the bourgeoisie. Conditions arose for the creation of an advanced proletarian worldview ‐ scientific socialism.

Karl Marx (1818‐1883) and Friedrich Engels (1820‐1895) turned socialism from a utopia into a science. The doctrine worked out by Marx and Engels expresses the fundamental interests of the working class and is the banner of the struggle of the proletarian masses for the revolutionary overthrow of capitalism, for the victory of socialism. Marxʹs teaching ʺarose as a direct and immediate continuation of the teachings of the greatest representatives of philosophy, political economy and socialismʺ[4].

The genius of Marx, as Lenin pointed out, lies precisely in the fact that he gave answers to questions that the progressive thought of mankind had already posed. His teaching is the legitimate successor to the best that has been created by human thought in the field of the science of human society. At the same time, the emergence of Marxism was a radical revolutionary change in philosophy, in political economy, in all social sciences. Marx and Engels armed the working class with a coherent and harmonious worldview ‐ dialectical materialism, which is the theoretical foundation of scientific communism.

By extending dialectical materialism to the realm of social phenomena, they created historical materialism, which is the greatest achievement of scientific thought. They opposed the non‐historical approach to human society with a historical approach based on a deep study of the actual course of development. They replaced the previously dominant idea of the immutability, immobility of society with a coherent doctrine that reveals the objective laws of social development ‐ the laws of the replacement of one form of society by another. Marx and Engels were the founders of a truly scientific political economy. By applying the method of dialectical materialism to the study of economic relations, Marx brought about the most profound revolutionary change in political economy.

Approaching political economy as the ideologist of the working class, Marx revealed to the end the contradictions of capitalism and created proletarian political economy. Marx created his economic doctrine in an uncompromising struggle against the bourgeois apology for capitalism and petty‐bourgeois criticism of it. Using and developing a number of provisions of the classics of bourgeois political economy ‐ Smith and Ricardo, Marx decisively overcame the anti‐scientific views and contradictions contained in their teaching. In his economic teaching, Marx summed up and generalized the gigantic material on the history of human society and, in particular, on the history of the emergence and development of capitalism. Marx is credited with the discovery of the historically transient nature of the capitalist mode of production and the study of the laws of the rise, development, and death of capitalism. Based on a deep economic analysis of the capitalist system, Marx substantiated the historical mission of the proletariat as the gravedigger of capitalism and the creator of a new, socialist society.

The foundations of the Marxist worldview were already proclaimed in the first program document of scientific communism ‐ in the ʺManifesto of the Communist Partyʺ, written by Marx and Engels in 1848. Marx published the results of his further economic research in the work ʺOn the Critique of Political Economyʺ (1859), dedicated to analysis of goods and money; the preface to this work gives a classic exposition of the foundations of historical materialism. Marxʹs main work, which he rightfully called his lifeʹs work, is Capital. The first volume of Capital (The Process of Production of Capital) was published by Marx in 1867; the second volume (The Process of Circulation of Capital) was published by Engels after the death of Marx, in 1885, and the third volume (The Process of Capitalist Production Taken as a Whole) in 1894. While working on Capital, Marx intended to write a fourth volume devoted to a critical analysis of the history of political economy. The preparatory manuscripts he left were published after the death of Marx and Engels under the title ”Theories of surplus valueʺ (in three volumes).

A number of Engelsʹ classical works are also devoted to the development of the theory of scientific communism. These include: ʺThe Condition of the Working Class in Englandʺ (1845), ʺAnti‐Dühringʺ (1878), which dealt with the most important issues from the field of philosophy, natural science, and social sciences, ʺThe Origin of the Family, Private Property and the Stateʺ (1884) and others.

In creating proletarian political economy, Marx first of all substantiated and consistently developed the labor theory of value. Investigating the commodity, the contradiction between its use value and value, Marx discovered that the labor contained in the commodity has a dual character. It is, on the one hand, concrete labor that creates the use value of a commodity, and, on the other hand, abstract labor that creates its value. The revelation of the dual character of labor served Marx as the key to the scientific explanation of all the phenomena of the capitalist mode of production on the basis of the labor theory of value. Having shown that value is not a thing, but the production relation of people, covered with a material shell, Marx revealed the secret of commodity fetishism. He analyzed the form of value, studied its historical development from the first rudiments of exchange to the complete dominance of commodity production, which enabled him to reveal the real nature of money.

The labor theory of value served as the basis for Marxʹs theory of surplus value. Marx was the first to show that under capitalism the commodity is not labor, but labor power. He investigated the value and use value of this specific commodity and explained the nature of capitalist exploitation. Marxʹs theory of surplus value completely reveals the essence of the main production relation of capitalism ‐ the relationship between the capitalist and the worker, reveals the deepest foundations of class opposition and the class struggle between the proletariat and the bourgeoisie.
Marx not only revealed the origin and source of surplus value, but also explained how capitalist exploitation is masked and obscured. He investigated the essence of wages as the price of labor power, acting in a transformed form of the price of labor.

Marx gave a deep scientific analysis of the various forms that surplus value takes. He showed how surplus value appears in a transformed form, in the form of profit, and how it further takes the form of land rent and interest. Moreover, a deceptive appearance is created, as if wages are the price of labor, as if profit is generated by capital itself, rent by land and interest by money.

In his doctrine of the price of production and average profit, Marx resolved the contradiction that, under capitalism, market prices deviate from value. At the same time, he revealed the objective basis of the solidarity of the capitalist class with regard to the exploitation of workers, since the average profit received by each capitalist is determined by the degree of exploitation not in a single enterprise, but in the entire capitalist society.

Marx developed the theory of differential rent and for the first time gave a scientific justification for the theory of absolute rent. He explained the reactionary, parasitic role of large land ownership, the essence, and forms of exploitation of the peasants by the landowners and the bourgeoisie.

Marx first revealed the laws of capitalist accumulation, establishing that the development of capitalism, the concentration and centralization of capital inevitably leads to a deepening and aggravation of the contradictions inherent in this system, which are based on the contradiction between the social nature of production and the private capitalist form of appropriation. Marx discovered the universal law of capitalist accumulation, which determines the growth of wealth and luxury at one pole of society and the growth of poverty, oppression, and labor pain at the other pole. He showed that with the development of capitalism, there is a relative and absolute impoverishment of the proletariat, which leads to a deepening of the gulf between the proletariat and the bourgeoisie, to an intensification of the class struggle between them.

Marxʹs analysis of the reproduction of all social capital is of the utmost importance . Having eliminated Smithʹs mistake, which consisted in ignoring the constant capital consumed in the production of goods, establishing the division of the social product according to value into three parts (c + v + m), and according to the natural form ‐ into the means of production and consumer goods, Marx analyzed the conditions of simple and expanded capitalist reproduction, deep contradictions of capitalist realization, inevitably leading to crises of overproduction. He investigated the nature of economic crises and scientifically proved their inevitability under capitalism.

The economic doctrine of Marx and Engels is a deep and comprehensive justification for the inevitability of the collapse of capitalism and the victory of the proletarian revolution, which establishes the dictatorship of the working class and opens a new era ‐ the era of building a socialist society.

Already in the 70s and 80s of the XIX century, Marxism began to receive more and more recognition among the working class and the advanced intelligentsia of the capitalist countries. Paul Lafargue (1842 ‐ 1911) in France, Wilhelm Liebknecht (1826 ‐ 1900) and August Bebel (1840 ‐ 1913) in Germany, G. V. Plekhanov (1856 ‐ 1918) in Russia played an important role in spreading the ideas of Marxism in those years. , Dmitry Blagoev (1855 ‐ 1924) in Bulgaria and other prominent figures of the labor movement in various countries.

In Russia, the Marxist Workersʹ Party and its world outlook took shape in an uncompromising struggle against the bitterest enemy of Marxism; populism.

The Narodniks denied the leading role of the proletariat in the revolutionary movement: they asserted that the development of capitalism was allegedly impossible in Russia. Plekhanov and the Emancipation of Labor group, organized by him, spoke out against the Narodniks. Plekhanov was the first to give a Marxist critique of the erroneous views of the Narodniks and at the same time launched a brilliant defense of Marxist views. Plekhanovʹs activities in the 1880s and 1890s were of great importance for the ideological training of proletarian revolutionaries in Russia. In a number of works, Plekhanov successfully popularized certain aspects of Marxʹs economic doctrine, defending this doctrine from bourgeois criticism and reformist perversions. Plekhanovʹs literary works thoroughly undermined the position of the Narodniks.

But the ideological defeat of populism was not completed. Already in the early period of his activity, Plekhanov had an erroneous understanding of a number of issues, which was the embryo of his future Menshevik views: he did not take into account that in the course of the revolution the proletariat should lead the peasantry, he considered the liberal bourgeoisie as a force that could support the revolution, etc. The task of finishing off populism as the enemy of Marxism and uniting Marxism with the workersʹ movement in Russia was solved by
Lenin.

Further decomposition of bourgeois economic science.
Modern bourgeois political economy.

From the time that Marxism entered the historical arena, the main and decisive task of bourgeois economists has been the
ʺrefutationʺ of Marxism.

In Germany in the middle of the 19th century, the so‐called historical school of political economy arose (W. Roscher, B. Hildebrand , and others). Representatives of this school openly denied the existence of economic laws of the development of society and replaced scientific research with a description of disparate historical facts. The denial of economic laws served these economists as a justification for any reactionary arbitrariness, groveling before the military‐bureaucratic state, which they exalted in every possible way.

Later representatives of the historical school, headed by G. Schmoller , formed the so‐called historical‐ethical or historicallegal direction. A characteristic feature of this trend, also called katheder‐socialism (literally ʺsocialism of the pulpitʺ), is the substitution of economic research for reactionary‐idealist chatter about moral goals, legal norms, etc. Continuing the traditions of their predecessors, katheder‐socialists acted as servants of the militaristic German state , each event of which they declared ʺa piece of socialism.ʺ The Katheder Socialists glorified Bismarckʹs reactionary policies and helped him to deceive the working class.

In the last decades of the 19th century, as the ideas of Marxism spread, the bourgeoisie needed new ideological means to fight them. Then the so‐called Austrian school appeared on the scene. The name of this school is due to the fact that its main representatives ‐ K. Menger, F. Wieser and E. Böhm‐Bawerk ‐ were professors at Austrian universities. In contrast to the historical direction, the representatives of the Austrian school formally recognized the need to study economic laws, but in order to embellish and protect the capitalist order, they transferred the search for these laws from the sphere of social relations to the subjective psychological area, that is, they took the path of idealism.

In the field of value theory, the Austrian school put forward the so‐called ʺmarginal utilityʺ principle. According to this principle, the value of a commodity is determined not simply by its utility, as some vulgar economists used to say, but by the marginal utility of the commodity, that is, the least urgent of the needs of the individual, which this unit of commodity satisfies. In fact, this theory does not explain anything. It is quite obvious, for example, that the subjective evaluation of a kilogram of bread is fundamentally different for a satiated bourgeois and a hungry unemployed man, and yet both of them pay the same price for bread. To Marxʹs theory of surplus value, economists of the Austrian school opposed the antiscientific ʺtheory of imputationʺ, which was only an updated form of the vulgar theory of the ʺthree factors of productionʺ. The transition to imperialism and the extreme aggravation of social contradictions and the class struggle connected with it caused a further degradation of bourgeois political economy. After the victory of the socialist revolution in the USSR, which practically refuted the assertions of the ideologists of the bourgeoisie about the eternity of the capitalist system, bourgeois economists began to see one of their main tasks in hiding from the working people of the capitalist countries the truth about the world‐historical achievements of the country of socialism by slandering the Soviet Union. Modern bourgeois political economy is the ideological weapon of the financial oligarchy, it is the servant of imperialist reaction and aggression.

In explaining such categories of capitalism as value, price, wages, profit, rent, modern bourgeois economists usually take the position of the subjective‐psychological direction, one of the varieties of which is the Austrian school discussed above, and rehash the old vulgar theory of three factors in different ways. production. The English economist Alfred Marshall (18421924) tried to eclectically reconcile three different vulgar theories of value: supply and demand, marginal utility, and cost of production. American economist John Bates Clark (1847 ‐ 1938), preaching the false idea of ʺharmony of interestsʺ of various classes of bourgeois society, put forward the theory of ʺmarginal productivityʺ, which in fact is only a kind of attempt to combine the old vulgar theory of ʺproductivity of capitalʺ with the vulgar theory of ʺmarginal utilityʺ of the Austrian school. Profit, according to Clarke, is supposedly a reward for the work of the entrepreneur, and the working classes create only a small share of wealth and receive it in full.

Unlike the bourgeois economists of the era of pre‐monopoly capitalism, who sang of freedom of competition as the main condition for the development of society, modern bourgeois economists usually emphasize the need for all‐round state intervention in economic life. They exalt the imperialist state as a force supposedly standing above classes and capable of subordinating the economy of the capitalist countries to planning. Meanwhile, in reality, the intervention of the bourgeois state in economic life has nothing in common with the planning of the national economy, and further strengthens the anarchy of production. Apologists for monopolies hypocritically pass off as ʺorganized capitalismʺ the subordination of the imperialist state to the financial oligarchy,

In the first decades of the 20th century, the so‐called social direction, or the socio‐organic school of political economy , became widespread in Germany (A. Ammon, R. Stoltzmann, O. Spann and others). In contrast to the Austrian school with its subjective‐psychological approach to economic phenomena, representatives of the social direction talked about the social relations of people, but they considered these relations idealistically, as legal forms devoid of any material content. Economists of the social direction argued that social life was supposedly governed by legal and ethical norms. They covered up their zealous service to the capitalist monopolies with demagogic arguments about the ʺcommon goodʺ and the need to subjugate the ʺpartʺ, that is, the working masses, to the ʺwholeʺ, that is, the imperialist state. They extolled the activity of the capitalists, declaring it a service to society. The reactionary fabrications of this school served as an ideological weapon for fascism in Germany and other bourgeois countries. German fascism used the most reactionary elements of German vulgar political economy, its extreme chauvinism, admiration for the bourgeois state, preaching the conquest of foreign lands and ʺclass peaceʺ within Germany. Being the worst enemies of socialism and all progressive mankind, the German fascists resorted to anti‐capitalist demagogy and hypocritically called themselves National Socialists. Italian and German fascists preached the reactionary theory of the ʺcorporate stateʺ, according to which capitalism, classes and class contradictions were supposedly eliminated in fascist countries. Nazi economists justified the predatory practice of seizing foreign lands by Nazi Germany with the help of the so‐called ʺracial theoryʺ and the ʺtheory of living space.ʺ According to these ʺtheoriesʺ, the Germans are allegedly the ʺsuperior raceʺ, and all other nations are “inferior”, and the “race of masters” supposedly has the right to seize the lands of other, “inferior” peoples by force and extend their dominance to the whole world. Historical experience has clearly shown all the absurdity and impracticability of Hitlerʹs crazy plans for the conquest of world domination.

During the period of the general crisis of capitalism, when the problem of the market became unprecedentedly acute, economic crises became more frequent and deepened, permanent mass unemployment arose, various theories appeared that inspired the illusion that it was possible to ensure ʺfull employmentʺ, eliminate the anarchy of production and crises while maintaining the capitalist system. The theory of the English economist J. M. Keynes (1883‐1946), which he outlined in his book The General Theory of Employment, Interest and Money (1936), was widely adopted among bourgeois economists .

Obscuring the real causes of constant mass unemployment and crises under capitalism, Keynes seeks to prove that the cause of these ʺflawsʺ of bourgeois society lies not in the nature of capitalism, but in the psychology of people. According to Keynes, unemployment is the result of insufficient demand for personal and industrial consumption. The lack of consumer demand is caused, as it were, by the propensity inherent in people to save a part of their income, and the lack of demand for articles of industrial consumption is caused by the weakening of the capitalistsʹ interest in applying their capital in various branches of the economy due to the general decrease in the ʺprofitability of capitalʺ. In order to increase employment, Keynes argues, it is necessary to expand investment, for which the state must, on the one hand, ensure the growth of the profitability of capital by lowering the real wages of workers, by means of inflation and lowering the rate of loan interest, and, on the other hand, by making large capital investments at the expense of the budget. To expand consumer demand, Keynes recommends a further increase in the parasitic consumption and squandering of the ruling classes, an increase in spending on military purposes and on other unproductive expenditures of the state.

Keynesʹs theory is completely untenable and profoundly reactionary in its essence. The lack of consumer demand is caused not by the mythical ʺinclination of people to saveʺ, but by the impoverishment of the working people. The measures proposed by Keynes supposedly in the interests of ensuring full employment of the population ‐ inflation, the growth of unproductive costs for preparing and conducting wars ‐ actually lead to a further decrease in the living standards of the working people, to a narrowing of the market and an increase in unemployment. The vulgar theory of Keynes is now widely used by bourgeois economists, as well as by right‐wing socialists in the USA, Britain, and other capitalist countries.

The modern vulgar political economy of the United States is characterized by a theory that promotes the growth of the state budget and public debt as a means of overcoming the vices of capitalism. American economist A. Hansen, Considering that the possibilities for the further development of capitalism through the action of spontaneous economic forces alone are significantly narrowed, he proves the need for ʺregulationʺ of the capitalist economy by the state by forcing capital investments through increased state orders. He preaches organization at the expense of the state budget, that is, at the expense of taxes and loans, public works, which supposedly should provide ʺgeneral employmentʺ and improve modern capitalism. In fact, in the context of the preparations by the imperialist powers for a new world war, this kind of ʺpublic workʺ means nothing more than the construction of strategic highways, railways, airfields, naval bases, etc., that is, the further militarization of the economy and, associated with thereby exacerbating the contradictions of imperialism.

Some bourgeois economists in the USA and Britain advocate ʺthe free play of economic forces,ʺ by which they actually mean the unlimited freedom of the monopolies to exploit the workers and rob consumers. These economists hypocritically declare the activity of the trade unions in defense of the workers a violation of ʺeconomic freedomʺ and praise the reactionary anti‐worker legislation of the imperialist states. Both the heralds of the “regulation” of the economy by the bourgeois state and the defenders of the “free play of economic forces” express the interests of the financial oligarchy, which seeks to secure maximum profit for itself by further intensifying the exploitation of the working masses at home and by imperialist aggression in the international arena.

Bourgeois economists try to justify the predatory policy of the imperialist powers seizing foreign lands, enslaving, and robbing other peoples with anti‐scientific fabrications about the ʺunequal valueʺ of different races and nations, about the civilizing mission of the ʺhigherʺ races and nations in relation to the ʺlowerʺ, etc. They are especially zealous in this respect, reactionary American economists who, following in the footsteps of the German fascists, spread the misanthropic idea of the “superiority” of English‐speaking nations over all other peoples and strive in every possible way to justify the crazy plans for establishing US world domination.

The reverse side of the racial theory is bourgeois cosmopolitanism, which denies the principle of the equality of nations and demands the destruction of state borders. Bourgeois cosmopolitans declare national sovereignty, the independence of peoples an obsolete concept, and proclaim the existence of nation‐states as the main cause of all social disasters of modern bourgeois society ‐ militarism, wars, unemployment, poverty of people, etc. They oppose the cosmopolitan idea of a “world state” to the principle of national sovereignty of peoples , in which they invariably assign the United States the leading role. The same goal of eliminating the national sovereignty of the European peoples and completely subordinating them to the domination of the US imperialists is pursued by the intensified propaganda of the idea of a ʺunited
Europeʺ, a ʺUnited States of Europeʺ.

Many US bourgeois economists come out with direct propaganda of a new world war. They declare war to be a natural and eternal phenomenon of social life, asserting that the peaceful coexistence of the countries of the capitalist camp and the countries of the socialist camp is impossible.

In order to justify imperialist aggression and to prepare for a new world war, the long‐unmasked theory of Malthus is widely propagated in bourgeois literature. Modern Malthusianism is characterized by a combination of the reactionary ideas of Malthus with racial theory. The Malthusians of the United States and other bourgeois countries assert that the globe is overpopulated as a result of the ʺexcessive reproductionʺ of people, which is the root cause of hunger and all other calamities of the working masses. They demand a sharp reduction in population, especially in colonial and dependent countries whose peoples are waging a liberation struggle against imperialism. Modern Malthusians call for devastating wars with the use of atomic bombs and other means of mass extermination of people.

All these statements of the apologists of capitalism serve as clear evidence of the complete bankruptcy of modern bourgeois political economy.